Smava proves Zopa's social lending model works in Germany too

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Smava, a “social lending” marketplace similar to Zopa in the UK, has closed a second financing round with VCs Earlybird and Hamburg-based Neuhaus Partners to the tune of 4 Million Euro. Earlybird was already a first round investor and Neuhaus Partners came in to the sceond round.

Berlin-based Smava generates revenue by collecting a one-time one percent fee on funded loans from borrowers. Lenders can use the service cost-free.

Smava has turned over some 4 million Euro in originated loans, so it’s clear that social lending marketplaces do not only work in the US, as with Prosper, but also in Germany. In fact, social lending may end up a big deal in Germany as credit has never been a popular financial vehicle (credit card use there is tiny), but “social” support is ingrained in the culture.

I’m a huge fan of the ZOPA model, but I’m not so sure these copycat sites can be successful. What will prevent Zopa from coming into other European countries (I think they are already in Italy?) and dominating. Sites like Smava have to grow exponentially in a hurry to have some sort of moat to defend against Zopa or Prosper from entering their markets.

Good luck to them though – its a great model.

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@Shafqat

Internationalization is not easy for p2p lending services. Unlike other Web 2.0 services they are bound by strict financial regulations, which differ vastly from country to country. Zopa went the route to joint venture with local partners.

And while Prosper, Smava and other are sucessful and growing they are still far away from becoming profitable. The still need to multiple their current loan volumes